In a deal that will put a homegrown, longstanding Miami bank under Chilean ownership, City National Bank of Florida will be sold to Chile’s Banco de Credito e Inversiones.
The $882.8 million deal, signed in New York Friday afternoon, is the culmination of months of bidding and due diligence by several international and local banks for City National, the fifth largest bank in Florida with $4.7 billion in assets.
City National’s Spanish parent Bankia had said last November that it was required to sell its non-core and foreign assets, including City National, as part of an agreement with the European Union to recapitalize Bankia and other institutions.
For Banco de Credito e Inversiones, the third largest bank in Chile, the purchase represents its first major foray into the U.S. banking market. Since 1999, it has operated a branch in downtown Miami, which has $3 billion in assets.
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“We have been in the Florida market for 14 years and we have been very successful, and this was a long term strategy we are following and it had been delayed because of the sub-prime crisis,” said Banco de Credito e Inversiones Chief Executive Lionel Olavarría, in a phone interview from New York.
“It’s a very good opportunity for us, because the relative prices of banks in Florida are much better now than in 2006 and 2007,” he said. “And we want to increase trade and investment from Chile and Florida — we are very good trade partners. And our plan is to support middle market companies and small businesses.”
City National Bank Chief Executive Jorge Gonzalez said the 67-year-old bank will remain a locally-based community bank, and will continue to operate under the City National Bank name. The bank has 26 branches from Miami-Dade County to the greater Orlando area.
“We are excited with the prospect of becoming part of the Bci family. This will allow City National Bank the opportunity to continue to grow, while remaining true to its mission of providing best-in-class service through personal relationships and access to decision makers,” Gonzalez said in a statement. “We remain a strong and stable community bank and will be backed by the strength of one of Latin America’s largest and most respected financial institutions.”
The deal, subject to regulatory approvals, is expected to close by year-end.
It is the latest ownership twist for City National Bank. In 2008, Caja Madrid of Spain bought the bank from Leonard Abess, who famously shared $60 million in proceeds with his current and former employees. The Spanish bank initially bought 83 percent of City National for $927 million, then paid another $190 million for the remainder of the bank. In 2010, Caja Madrid was involved in a seven-bank merger that formed Bankia.
During the past week, Caja Madrid’s purchase of City National became a center point in a potential criminal case unfolding in Spain, when Miguel Blesa, Caja Madrid’s former executive chairman, was accused of leaving the company saddled with huge losses because of an allegedly ill-advised purchase of City National.
In the latest negotiations to buy City National, the bidders included Brazil’s Banco do Brasil and BankUnited, based in Miami Lakes.
For Banco de Credito e Inversiones, the purchase represents “a perfect match,” Olavarría said, citing City National’s strong brand and well-capitalized status. He said the bank plans to hold onto City National’s branch network and 450 employees.
“The news could not be better,” said Miami-based independent bank consultant and economist Ken Thomas. “It’s a strong, well-regarded and well-capitalized parent from South America that will allow this bank to grow,” Thomas said. “It’s really good news for South Florida that we didn’t lose a key player and that their management team remains in place.”
Founded by the Abess family 67 years ago, City National has consistently been awarded top rankings by ratings agencies. BauerFinancial, the Coral Gables rating firm, currently rates it five stars, or superior, on a zero-to-five star scale.
Banco de Crédito e Inversiones has $38 billion in assets, and in addition to its Miami office, operates representative offices in Mexico City, Lima, Sao Paulo, Madrid and Bogota.
“We were very pleased with the quality of the management team and the people of City National Bank during due diligence, and we found we are very close in terms of the culture, and that is a strong point for us,” Olavarría said. “They are very oriented and focused on customers, and they deal everyday to improve the quality of service and customer experience.”